Australian Lawyers Propose Creation of a DAO Legal Entity: Report

Such a move give legal standing to blockchain-based organizations, enabling DAOs to contract with other legal persons.

AccessTimeIconJul 15, 2021 at 11:25 a.m. UTC
Updated Sep 14, 2021 at 1:25 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Lawyers and developers working in decentralized finance (DeFi) are asking for a new limited liability legal entity in Australia that would represent decentralized autonomous organizations (DAOs).

The Digital Law Association, an association of technology lawyers, and global law firm Herbert Smith Freehills are lobbying an Australian Senate committee to propose the creation of the new entity, the Australian Financial Review (AFR) reported.

Such a move would give legal standing to the blockchain-based organizations, enabling DAOs to contract with other legal persons.

A DAO is a decentralized network of nodes organized through blockchain code. It may include members and nodes from around the world. Members usually participate in decision-making by voting with governance tokens.

For the purposes of corporate governance, boards of directors would be replaced with internet communities. Having a limited liability structure would prevent every member from "being potentially liable for losses incurred by decisions made by a member of the community," the report said.

Shareholders of limited liability entities are not liable for company debts or losses unless they have provided personal guarantees, according to the Australian Securities and Investments Commission.

The Senate Select Committee on Australia as a Technology and Financial Center is tasked with forming Australia's fintech and blockchain policy.

The lawyers argue that a limited liability DAO status would attract developers and entrepreneurs to Australia, the article said.

The AFR has previously reported that crypto talent is flocking to countries with clearer regulation on the industry, such as Germany and Singapore.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


Read more about